GAO

United States General Accounting Office

Report to the Chairman, Subcommittee 

on Housing and Community Opportunity, 

Committee on Banking and Financial 

Services, House of Representatives

November 2000 PUBLIC HOUSING 

HUD Needs Better 

Information on 

Housing Agencies’ 

Management 

Performance

GAO-01-94

Page 1 GAO-01-94 Public Housing

Contents

Letter 3

Appendixes Appendix I: Housing Agencies’ Management Performance Survey 28

Appendix II: GAO Contacts and Staff Acknowledgments 52

Figures Figure 1: Six Components of PHAS Management Operations 8

Figure 2: Effect of Housing Agencies’ PHAS Scores 10

Figure 3: PHAS Management Operations Components Rated as 

Moderately, Very, or Extremely Important 12

Figure 4: Factors Field Offices Judge Most Important to Providing 

Effective Assistance to Housing Agencies 16

Figure 5: Limited Field Office Use of Most Effective Sanctions 20

Abbreviations

HUD Department of Housing and Urban Development

PHAS Public Housing Assessment System
Page 2 GAO-01-94 Public Housing
Page 3 GAO-01-94 Public Housing

United States General Accounting Office

Washington, D.C. 20548 Letr

November 9, 2000

The Honorable Rick Lazio

Chairman, Subcommittee on Housing

and Community Opportunity

Committee on Banking and Financial Services

House of Representatives

Dear Mr. Chairman:

The Department of Housing and Urban Development (HUD) spends nearly 

$7 billion annually on the public housing program, providing affordable 

homes to low-income households. HUD depends on and funds more than 

3,000 local public housing agencies to manage the day-to-day operations of 

public housing, providing assistance to and oversight of these agencies 

through 43 of its field offices. For HUD to be accountable for the 

performance of the public housing program, it must first rely on holding the 

housing agencies accountable for providing safe and decent housing and 

protecting the federal investment in their properties. For HUD to do so, it 

has to be able to effectively measure housing agencies’ performance and—

using its measurements of the agencies’ performance—assist those that 

need help and hold accountable those that do not improve. Also, by statute, 

HUD must assess the performance of housing agencies to evaluate their 

actions in all major areas of management operations and to designate as 

“troubled” any agency that fails on a widespread basis to provide 

acceptable housing conditions. 

HUD primarily measures housing agencies’ management performance 

through the management operations indicator of its Public Housing 

Assessment System (PHAS), which it implemented in June 2000. The PHAS 

management operations indicator is largely unchanged from HUD’s 

previous performance measurement system, the Public Housing 

Management Assessment Program, which rated housing agency 

performance in areas such as completing routine maintenance requests. 

Because we reported to you in the past that HUD needed to make its old 

assessment program more accurate and useful,1

 you asked us to report on 

the effectiveness of HUD’s oversight of the management performance of 

1

Public Housing: HUD Should Improve the Usefulness and Accuracy of Its Management 

Assessment Program (GAO/RCED-97-27, Jan. 29, 1997).
Page 4 GAO-01-94 Public Housing

housing agencies through PHAS. As agreed with your office, this report 

discusses factors that HUD field and headquarters staff indicate most 

influence HUD’s ability to (1) effectively measure the management 

performance of housing agencies, (2) provide assistance to those agencies 

that need to improve their performance, and, (3) hold accountable those 

agencies that fail to improve their performance. To address these 

questions, we surveyed all 43 of HUD’s field office directors of public 

housing because they have the most direct day-to-day experience in HUD’s 

oversight of and assistance to public housing agencies. We received 

responses from 41 of the 43 field offices, which is a 95-percent response 

rate. Our survey included questions on the full range of these officials’ 

oversight responsibilities, such as their experiences with HUD’s previous 

management assessment program and PHAS (the current system), the 

adequacy of current levels of resources and other factors that affect their 

oversight of and assistance to housing agencies, and their experiences 

using sanctions to hold accountable poorly performing agencies. We did 

not independently verify the field offices’ responses. Our detailed scope 

and methodology are discussed at the end of this report, and the results of 

our survey are presented in appendix I. 

Results in Brief According to our survey, the management operations indicator of HUD’s 

Public Housing Assessment System includes the components HUD’s field 

offices judge most important to gauging the quality of a housing agency’s 

management (for example, how many of a housing agencies’ major 

systems—such as heating and air conditioning—it inspects each year). 

However, HUD lacks adequate assurance that the data that housing 

agencies self-certify on these components are accurate. Over 40 percent of 

HUD’s field offices reported that, in the past, housing agencies certified to 

inaccurate or incomplete data to a moderate or greater extent because, for 

example, the agencies had misinterpreted HUD program requirements, 

definitions, or rules. Under the new Public Housing Assessment System, 

HUD headquarters and its field offices perform initial quality assurance 

reviews of the data the agencies certify, but neither involves first-hand 

verification of the data. To identify when housing agencies submit 

inaccurate management operations data, HUD primarily relies on 

independent audits conducted at most housing agencies each year to 

substantiate that data. However, HUD headquarters officials told us that 

their initial quality control reviews of these audits have found that some 

have not included the work HUD expects of them to substantiate 

management operations data. According to our survey, in 21 instances, 

agencies that self-certified to being standard or high performers were later 
Page 5 GAO-01-94 Public Housing

found to be troubled; field offices reported that 15 of the agencies’ audits 

did not identify problems with the agencies’ self-certified data. Under 

HUD’s Public Housing Assessment System, failing to identify inaccurate 

housing agency data could be costly to other housing agencies because 

HUD plans to award performance bonuses to high-performing housing 

agencies—on the basis, in part, of their self-certified data—and will pay for 

the bonuses with funds it had set aside for other agencies. As a result, we 

are making recommendations to HUD to improve its assurances that 

management operations data are accurate and ensure that it uses 

adequately verified information on housing agencies’ performance for 

purposes such as awarding performance bonuses. 

HUD’s field offices identified nine factors in our survey, such as training 

funds for the field office staff, that they judge to be most important to 

providing effective assistance to housing agencies needing to improve their 

performance. Of these nine factors, the field offices reported that for 

four—their expertise in HUD programs, expertise in rental property 

management, working knowledge of housing agencies, and travel funds—

they are adequately prepared to assist housing agencies. However, they 

also reported that for five of these factors—the number of field office staff, 

their workload relative to the number of staff, their workload relative to the 

field office staff qualifications and training, the amount of field office 

training funds, and, the amount of technical assistance funds available to 

them—they believe they are currently not adequately prepared to assist 

housing agencies. The HUD headquarters official in charge of field office 

operations acknowledged that its field offices need additional training, in 

part because of substantial turnover in recent years in the field offices and 

because of numerous new and revised program requirements resulting 

from recent public housing reforms. HUD has since begun providing 

additional training to its field office staff. Moreover, this official agreed that 

HUD’s field offices face resource constraints, particularly in terms of the 

number of staff relative to workload. HUD attributes field office staffing 

constraints to attrition and staff reductions in recent years but doubts that 

it will be able to increase its field office staffing. As a result, HUD is 

currently evaluating the field offices’ workload, focusing on reducing or 

eliminating responsibilities that may no longer be necessary. 
Page 6 GAO-01-94 Public Housing

HUD’s field offices may use sanctions if they find it necessary to do so in 

order to force a housing agency to correct a performance problem, such as 

an agency’s noncompliance with rules for verifying tenants’ incomes. 

Sanctions—such as restricting a housing agency’s use of HUD funds—can 

apply whether or not HUD designates the housing agency as troubled. 

However, according to our survey, HUD’s field offices use sanctions 

infrequently when housing agencies violate one or more of HUD’s program 

rules and requirements. For example, over three-fourths of HUD’s field 

offices reported that, in their experience, some of the housing agencies 

they oversee have needed to improve their performance because they made 

poor use of the funding HUD gave them to operate, maintain, or modernize 

their buildings. Nonetheless, over the last 5 years, almost 40 percent of the 

field offices responding to our survey indicated that they have never 

applied a sanction to improve the performance of a housing agency, and 

over two-thirds indicated that they have rarely threatened or initiated 

sanctions. According to a HUD headquarters official, this may be because 

field offices believe some sanctions, such as withholding HUD funds, could 

have negative short-term effects on public housing residents and because 

field offices instead prefer to work cooperatively with housing agencies to 

address problems. The 1998 public housing reform legislation2

 mandates 

that HUD use a specific sanction against troubled housing agencies that fail 

to substantially improve their performance as HUD measures it through its 

Public Housing Assessment System—giving these agencies at most 2 years 

to improve before HUD takes possession of the agency or seeks a courtordered receivership. As a result, HUD now has quantifiable, transparent 

criteria for deciding when and how it will hold accountable troubled 

housing agencies. Later this year, HUD expects to seek the first 

receiverships based on the 1998 public housing legislation. 

In commenting on a draft of this report, HUD provided us with additional 

information for our consideration. This information primarily dealt with 

the importance of the other PHAS indicators for accurately assessing 

housing agencies’ management, additional quality assurance steps HUD is 

taking to ensure accurate management operations data, and new field 

office training to improve oversight of and assistance to housing agencies. 

However, HUD did not directly address our report’s recommendations. Our 

detailed discussion of HUD’s comments are included at the end of this 

letter.

2

Public Law 105-276, the Quality Housing and Work Responsibility Act of 1998, Oct. 21, 1998.
Page 7 GAO-01-94 Public Housing

Background Through the United States Housing Act of 1937, the Congress created the 

federal public housing program to help communities provide decent, safe, 

and sanitary rental housing for low-income families, the elderly, and 

persons with disabilities. Today, approximately 1.3 million low-income 

households live in public housing. Because tenants’ rents typically do not 

cover the cost of operating public housing, HUD subsidizes more than 3,000 

local public housing agencies to help pay for their operating costs, such as 

routine maintenance, staff salaries, and administrative expenses, and 

provides the housing agencies with technical assistance in planning, 

developing, and managing public housing. HUD also provides funds to 

housing agencies for major modernization projects through its Capital 

Fund program.3

 For fiscal year 2000, HUD provided public housing 

agencies nearly $7 billion in such subsidies and technical assistance. 

HUD oversees public housing agencies’ performance by annually 

measuring their performance through PHAS and by conducting day-to-day 

activities to monitor compliance with, and provide assistance in meeting, 

the various HUD program requirements applicable to each housing agency. 

Annually, HUD measures the essential housing operations of public 

housing agencies through the Public Housing Assessment System (PHAS).4

In its day-to-day oversight of housing agencies, HUD—through 43 of its 

field offices—monitors housing agencies’ compliance with its programs’ 

rules and requirements, many of which fall outside of the scope of PHAS.5

Figure 1 shows the six components of housing agencies’ management 

operations that PHAS measures. 

3

HUD recently consolidated various modernization programs into a single program, the 

Capital Fund. HUD allocates money from the Capital Fund to housing agencies on the basis 

of a formula that includes factors such as the age of each agency’s buildings.

4

On Sept. 30, 1999, the PHAS management operations indicator replaced the Public Housing 

Management Assessment Program, which was the framework through which HUD met 

statutory requirements to assess management performance by using certain measures, such 

as vacancy rates and the average time a housing agency takes to repair and reoccupy vacant 

units. When HUD replaced the previous management assessment program, it also created 

new indicators that measure the physical condition of each agency’s buildings, residents’ 

satisfaction with living conditions, and the financial condition of the housing agency. 

Together, these four indicators make up PHAS.

5

For example, HUD oversees housing agencies’ compliance with fair housing laws through 

an annual contract with each agency because PHAS does not measure housing agencies’ 

performance in this area.
Page 8 GAO-01-94 Public Housing

Figure 1: Six Components of PHAS Management Operations

Source: HUD. 

123

4 5 6 7 8 9 10

11 12 13 14 15 16 17

18 19 20 21 22 23 24

25 26 28 29 30 31 27

Capital Fund: The percentage of its Capital Fund allocation from HUD that 

a housing agency obligates within 3 years, the timeliness of these obligations, 

the quality of the work for which the agency used the funds, and the 

adequacy of the agency's budget controls. 

Vacant Unit Turnaround Time: The housing agency's efforts to reduce 

the amount of time it takes to re-rent a unit after a tenant moves out and the 

adequacy of its system for tracking the time it takes to make units ready 

and re-rent them. 

Work Orders: The time the housing agency takes to complete emergency 

and nonemergency work orders and its progress in reducing the time it takes 

to complete nonemergency maintenance work orders.

Annual Inspections of Units and Systems: The percentage of a housing 

agency's units and major systems, such as heating and air conditioning, that 

the agency inspects annually to determine short-term maintenance and longterm Capital Fund needs.

Security: A housing agency's performance in tracking crime-related problems 

in its developments, reporting crimes to local law enforcement agencies, 

adopting and enforcing resident screening and eviction policies and 

procedures and other anticrime strategies, coordinating with residents and 

local governments on implementing anticrime strategies, and effectively using 

any HUD drug prevention or crime reduction grants the agency may receive.

Economic Self-Sufficiency: The agency's efforts to coordinate, promote, 

or provide effective programs and activities to promote residents' economic 

self-sufficiency.
Page 9 GAO-01-94 Public Housing

PHAS scores determine (1) whether HUD designates a housing agency as a 

high performer, standard performer, or troubled housing agency; (2) which 

HUD office will be responsible for overseeing the housing agency; and (3) 

whether the housing agency will be eligible for certain bonus funding. 

Specifically: 

• Using the total PHAS score, high performers are those scoring 90 

percent or greater and at least 60 percent of the points available under 

each of the four PHAS indicators; standard performers are those with a 

total score of 60 to 89 percent and at least 60 percent of the points 

available in the physical condition, financial condition, and management 

operations indicators; and, troubled agencies are those with total scores 

of less than 60 percent.6

 HUD designates as “substandard” those housing 

agencies that score less than 18 of the 30 possible points on each of the 

management operations, physical condition, or financial condition 

indicators. Also, HUD designates agencies that score less than 60 

percent of the maximum calculation for the Capital Fund component as 

substandard with respect to the Capital Fund program. 

• Standard- and high-performing housing agencies remain under the 

jurisdiction of a HUD field office, but troubled and substandard agencies 

must report to one of HUD’s two troubled agency recovery centers, 

which provide specialized oversight and recovery assistance to poorly 

performing agencies; and,

• High-performing housing agencies may be eligible for bonus points 

when they apply for certain funding HUD awards on a competitive basis; 

also, HUD plans later this year to begin using its Capital Fund program 

to award performance bonuses to high performers. 

Figure 2 illustrates how this scoring system and process works.

6

The total PHAS score, from 0 to 100 percent, is the summation of an agency’s scores on the 

management operations, physical condition, and financial condition components of PHAS 

(with each worth 30 points), plus the measure of the residents’ satisfaction, which is worth 

10 points. 
Page 10 GAO-01-94 Public Housing

Figure 2: Effect of Housing Agencies’ PHAS Scores

Source: HUD. 

To verify that the management operations data housing agencies certify are 

accurate, HUD relies on the independent public accountant auditors who 

review housing agencies’ financial statements each year to verify the 

agencies’ certifications and the supporting data behind them.7

 HUD expects 

the independent auditors to review the documentation and other 

7

The Single Audit Act (31 U.S.C. Chapter 7501-7507) requires an annual audit of states, local 

governments (including housing agencies), and nonprofit organizations that annually 

expend $300,000 or more of federal funds. The purpose of the annual audit is to tell HUD 

and housing agency officials whether the housing agency has fairly presented its financial 

statements and to provide reasonable assurance that the housing agency is managing its 

programs in accordance with applicable laws and regulations.

High performer

Standard performer

Troubled performer

0

Receivership

or

HUD takeover

Under

jurisdiction 

of 43 HUD

field offices

60

90

100

PHAS

scores

Inadequate improvement

in 1 year

Inadequate

improvement

in 2 years

Performance

improves

Two

troubled

agency

recovery

centers

Under

jurisdiction 

of 43 HUD

field offices

Eligible for

bonus points

Capital Fund

awards
Page 11 GAO-01-94 Public Housing

information to substantiate the management operations certifications 

submitted by housing agencies. Any major discrepancy between what a 

housing agency certifies and what its auditor finds should result in findings 

in the auditor’s annual audit report to that agency, and these results are also 

sent to HUD. 

In the course of their day-to-day oversight of housing agencies’ compliance 

with HUD program requirements, field offices may use sanctions to bring 

about improvements in a housing agency’s performance, but in most cases 

they are not required to do so if they do not believe sanctions are the best 

way to improve poor performance. Sanctions available to the field offices 

could include restricting the agency’s use of certain HUD program funds or 

temporarily withholding funds altogether. Under PHAS, troubled and 

substandard agencies face statutory deadlines for improving their 

performance and a mandatory sanction if they fail to do so. Specifically, if a 

troubled agency does not substantially improve its performance in each of 

the 2 years after HUD first designates it as troubled, HUD must either take 

over all or part of the agency’s operations itself or seek from a court the 

appointment of a receiver to take over all or part of the troubled agency’s 

operations. 

HUD Assesses 

Important Measures of 

Management 

Performance, but It 

Needs Better Data on 

Housing Agencies’ 

Performance

HUD field office officials reported that the components that make up the 

PHAS management operations indicator are important measures for 

assessing the quality of a housing agency’s management. However, many of 

these officials’ responses to our survey also indicated that housing 

agencies’ self-certified data about their performance on the components of 

management operations can be inaccurate. HUD relies on the independent 

audits that many housing agencies must have done each year to alert it 

when management operations data might be inaccurate. However, HUD 

has found during a limited number of quality control reviews of these 

audits that some auditors have not done the work HUD expected of them 

and others are unclear about HUD’s expectations. According to our survey, 

in 15 instances involving troubled housing agencies, the audits did not 

identify for HUD problems with the agencies’ self-certified data. 
Page 12 GAO-01-94 Public Housing

HUD’s Public Housing 

Assessment System 

Includes Components Key 

to Measuring Management 

Performance and 

Identifying Poor Performers

To have an effective oversight system, HUD must ensure that it is 

measuring the right things—that is, it is using valid measures of 

management performance and has not overlooked additional components 

identified by those most familiar with housing agency operations. Our 

survey results indicate the field office officials believe HUD is measuring 

the right things in order to be sure housing agencies are providing safe and 

decent housing and protecting the federal investment in their properties. 

As figure 3 shows, field office officials concluded that nearly all of the 

PHAS management operations components are important measures for 

gauging how well a housing agency is managing its public housing program. 

Figure 3: PHAS Management Operations Components Rated as Moderately, Very, or 

Extremely Important

Note: The “vacant unit turnaround” component was not part of the PHAS management operations 

indicator at the time we developed our survey. The management operations components we included 

in our survey were drawn from the January 11, 2000 final PHAS rule, which listed the five components 

we show in figure 3. In June 2000, HUD issued a technical correction to the PHAS rule, noting that it 

(1) had inadvertently removed the vacant unit turnaround component when it also removed a separate 

vacancy-related component (vacancy rate) and (2) was reinstating the vacant unit turnaround 

component as part of the PHAS management operations indicator.

Source: GAO’s survey of HUD’s field office directors of public housing. 

Economic self-sufficiency

Security

Annual inspections

of units and systems

Work orders

Capital Fund

Percent of respondents

 PHAS Management

Operations Components

0 20 40 60 80 100
Page 13 GAO-01-94 Public Housing

Field offices rated only the economic self-sufficiency component as 

noticeably less important than the others, possibly because economic selfsufficiency focuses on the nonhousing needs of public housing residents. 

Additionally, few offered suggestions on other areas of performance HUD 

does not already measure. 

HUD Lacks Adequate 

Assurance That Housing 

Agencies’ Management 

Operations Data Are 

Accurate 

HUD lacks adequate assurance that housing agencies’ management 

operations data are accurate because it does not have in place a proven 

way to systematically verify the agencies’ self-certified performance data. 

HUD first depends on the housing agencies to collect performance data 

throughout the year in order to measure their management operations 

performance. At the end of their fiscal year(s), housing agencies analyze 

their performance data, report the information to HUD, and certify that the 

information is accurate. However, over 40 percent of the field offices 

responding to our survey reported that in the past, housing agencies 

certified to inaccurate or incomplete management operations data to a 

moderate or greater extent. Most often, they said, they believe housing 

agencies did so because the agencies (1) failed to collect all the data HUD 

requires; (2) misinterpreted HUD program requirements; or (3) lacked the 

expertise necessary to collect, analyze, and present detailed management 

operations performance data. 

To substantiate housing agencies’ management operations data, HUD relies 

heavily on the agencies’ independent audits to alert it to whether any of the 

data may be inaccurate. HUD officials stated that it is necessary to use the 

independent audit to substantiate the management operations data to 

which the agencies self-certify because its field offices usually do not have 

sufficient resources to visit significant numbers of housing agencies to do 

so themselves. Prior to PHAS, HUD required its field offices to visit some 

housing agencies to verify the agencies’ self-certified data. Under PHAS, 

HUD no longer requires these visits. Instead, as one HUD official 

characterized it, the independent audit is the Department’s first line of 

quality control in ensuring that housing agencies’ management operations 

data are accurate. 

According to HUD headquarters officials, because of the importance of the 

audit to its oversight of housing agencies, HUD has begun performing 

quality control reviews of the independent auditors’ work for public 

housing agencies. These reviews are to assess the audits’ compliance with 

professional standards and to ensure that the auditors comply with the 

associated statutory requirements. HUD envisions these reviews as a 
Page 14 GAO-01-94 Public Housing

deterrent against substandard work by housing agencies’ auditors. To date, 

HUD headquarters has performed only a limited number of reviews of 

housing agencies’ audits, but it has found instances in which the auditors 

have not performed the work HUD requires of them, including testing the 

housing agencies’ management operations data. HUD has also found that 

some auditors are unclear about what HUD expects they should and should 

not report when they find discrepancies between these data and the 

agencies’ certifications. 

HUD’s preliminary findings through these quality control reviews may 

explain some of the reasons why, according to our survey, HUD has not 

always learned through the agencies’ audits when agencies have certified 

to inaccurate data. Specifically, according to the field offices responding to 

our survey, prior to PHAS, 21 housing agencies certified to data indicating 

they were standard- or high-performing agencies. The field offices reported 

that HUD later determined these 21 agencies were, in fact, troubled during 

the time they had made these certifications. For six of these agencies, the 

field offices reported that the housing agencies’ audits had identified 

problems with the agencies’ certifications. However, for 15 of these 

agencies, the field offices reported that the audits had not identified such 

problems. 

Under PHAS, HUD is using additional quality assurance activities to 

analyze the housing agencies’ self-certified data before it either issues 

PHAS scores or, for most agencies, will have received their independent 

audits. HUD’s Real Estate Assessment Center, which receives and 

processes all housing agencies’ certifications, performs an initial review to 

identify if any submission is incomplete or contains any obvious errors. 

The field offices then perform a second quality assurance review to ensure 

housing agencies’ certifications are consistent with their knowledge of the 

agencies. Field offices can ask that a housing agency’s certification be put 

on hold if they have questions about it. If the field office has documentation 

that a housing agency’s certification is incorrect, the Real Estate 

Assessment Center can reject the agency’s PHAS score. Neither of these 

quality assurance reviews involves first-hand verification of the housing 

agencies’ management operations data. Furthermore, HUD’s field offices 

may not be in a position to provide the level of quality assurance HUD is 

expecting. Specifically, slightly over 80 percent of the field offices 

responding to our survey said that, under PHAS, HUD probably or 

definitely does not have the tools and resources necessary to ensure that 

the management operations data that housing agencies certify are accurate 

and complete. 
Page 15 GAO-01-94 Public Housing

Under PHAS, if HUD does not identify instances of inaccurate self-certified 

data, such as those the field offices reported to us, it could potentially be 

costly to other housing agencies. A housing agency’s PHAS management 

operations score, which HUD determines on the basis of the data the 

agency self-certifies, can be as much as 30 of the 90 points that it takes to 

be designated a PHAS high performer. Later this year, HUD plans to begin 

awarding the Capital Fund performance bonuses to PHAS high performers, 

with the funds for these bonuses coming out of the funds HUD otherwise 

allocates to standard-performing and troubled housing agencies.8

Additionally, HUD has said that PHAS high performers may, in the future, 

get bonus points when HUD considers their applications for funding that is 

awarded on a competitive basis. 

Field Offices Report 

They Are Adequately 

Prepared for Certain 

Important Assistance 

to Housing Agencies, 

but Other Key Factors 

May Be Inadequate 

Field office officials identified a number of factors—primarily related to 

their staffing and resources—that they judge as most important to 

providing effective assistance to housing agencies that need to improve 

their performance (see fig. 4). They also further described the areas 

(factors)in which they believe they currently are adequately or 

inadequately prepared to assist housing agencies. 

8

The 1998 public housing reform legislation requires that HUD include in the Capital Fund a 

mechanism to reward high performance (42 U.S.C. 1437g (d) (2)). While HUD is authorized 

to use PHAS scores as the mechanism, the legislation does not mandate that it use these 

scores. 
Page 16 GAO-01-94 Public Housing

Figure 4: Factors Field Offices Judge Most Important to Providing Effective 

Assistance to Housing Agencies

Source: GAO’s survey of HUD’s field office directors of public housing. 

Of the nine factors they judge most important to providing effective 

assistance to housing agencies, field office officials reported that, currently, 

conditions are adequate or better for four of these factors.9

 Specifically: 

9

“Adequate or better” refers to the sum of those field offices answering “adequate,” “more 

than adequate,” or “much more than adequate.”

Technical assistance funds

Travel funds

Training funds

Number of field office staff

 Workload relative

to number of staff

Working knowledge

of housing agencies

Workload relative to

qualifications and training

Field office expertise

(HUD programs)

Important factors

0 20 40 60 80 100

Field office expertise

(rental property management)

Percent of respondents
Page 17 GAO-01-94 Public Housing

• Over 70 percent of the field offices had adequate or better expertise in 

HUD programs, 

• over 80 percent had an adequate or better working knowledge of 

housing agencies, 

• just over half of the field offices had an adequate or better amount of 

travel funds available to them to visit housing agencies, and 

• just over half had an adequate or better amount of expertise in rental 

property management. 

With respect to five of the nine factors they judge most important to 

providing effective assistance to housing agencies, a majority of the field 

offices rated their current conditions as less or much less than adequate for 

providing effective assistance to housing agencies. Specifically: 

• Nearly 60 percent said their workload relative to the qualifications and 

training of the field office staff was less or much less than adequate, 

• 70 percent said their workload relative to the number of field office staff 

was less or much less than adequate, 

• over 80 percent had a less or much less than adequate number of field 

office staff,

• over 85 percent said that the amount of field office training funds is less 

or much less than adequate, and 

• over 75 percent said that the amount of technical assistance funds 

available to the field office is less or much less than adequate. 

A number of reasons may explain why the field offices rated these five 

factors as currently inadequate for assisting housing agencies. According to 

the HUD headquarters official responsible for field office operations, there 

has been substantial turnover in recent years among HUD’s field office 

directors of public housing, with at least half new to their positions within 

the last 2 years. This turnover, as well as the need for field office staff to be 

up to date with over 60 new or revised program requirements associated 

with the 1998 public housing reform legislation, has increased the need for 

and the importance of ongoing training for field office staff. However, this 

same official acknowledged that HUD has not had a great deal of funds 

available for field office training in recent years, which probably explains 

why 85 percent of the field offices reported that the amount of training 

funds available to them is less or much less than adequate. 

In commenting on a draft of this report, HUD noted that in response to the 

relative inexperience of some of its field office directors of public housing, 

it has developed managerial and program monitoring training courses that 
Page 18 GAO-01-94 Public Housing

focus on the full range of HUD programs and activities for which they are 

responsible. HUD also commented that it had recently convened a 2-week 

training session to provide field office staff with the knowledge and skills 

they need to (1) effectively monitor housing agencies’ compliance with the 

new and/or revised requirements associated with the 1998 public housing 

legislation and (2) provide the housing agencies technical assistance in the 

implementation and maintenance of HUD programs. 

The HUD headquarters official responsible for field office operations also 

noted that the number of staff in field offices has decreased in recent years 

because of attrition and departmental downsizing, adding that it has been 

and remains unlikely that HUD will be able to increase staffing in its field 

offices. As a result, HUD is currently considering alternative ways to 

address its field offices’ workload. HUD has under way a study of its field 

offices’ workload with a focus on reducing or eliminating responsibilities 

where it might make sense to do so. Also, instead of on-site visits to 

housing agencies, HUD has been emphasizing to field office staff the 

importance of remotely monitoring housing agencies as much as possible 

by means such as a new Internet-based system HUD is implementing to 

share information between housing agencies and HUD staff. 

HUD Sanctions 

Housing Agencies 

Infrequently, but 

Statutory Reforms 

Have Improved How 

HUD Holds Troubled 

Agencies Accountable

Regardless of whether or not HUD designates a housing agency as 

troubled, some housing agency performance problems can result in HUD’s 

applying a sanction to the agency in order to compel it to address and 

correct the problem(s). For example, HUD can restrict a housing agency’s 

use of the operating funds that it provides if the agency is not complying 

with rules for verifying tenants’ incomes. However, we found that HUD’s 

field offices infrequently sanction housing agencies for poor performance 

when they may have reason to do so. The 1998 public housing reform 

legislation improved HUD’s effectiveness at holding accountable the 

agencies HUD has designated as troubled when they fail to improve their 

performance. It did so by mandating that HUD seek a specific sanction—a 

takeover either by HUD or a court-appointed receiver—for troubled 

housing agencies that fail to substantially improve their performance 

within 1- and/or 2-year deadlines. HUD uses PHAS to determine whether a 

housing agency has substantially improved its performance. 

Field Offices Infrequently 

Sanction Housing Agencies

HUD field offices infrequently use the sanctions available to them to hold 

housing agencies accountable when they fail to substantially improve their 

performance in accordance with program rules or statutory requirements. 
Page 19 GAO-01-94 Public Housing

According to our survey, three-fourths of the field offices indicated that 

some of the housing agencies in their jurisdiction have needed to improve 

their performance because they made poor use of federal funding for their 

operations, maintenance, and modernization and revitalization efforts. 

Also, three-fourths of the field offices indicated that some housing agencies 

in their jurisdiction have needed to improve because of poor performance 

by their executive directors, staff, or governing body. More than two-thirds 

of the field offices responding to our survey also reported that in the last 5 

years, they either never or sometimes have threatened to use or initiated 

sanctions against housing agencies. Specifically, when we asked how often 

the HUD field offices threaten or initiate sanctions, they reported the 

following: 

• 29 do so never or sometimes; 

• 9 do so to a moderate extent; and, 

• 3 very often or always threaten or initiate sanctions. 

Additionally, 40 percent of HUD’s field offices responding to our survey 

said that in the last 5 years they have never applied a sanction or other 

punitive action(s) to improve the performance, governance, regulatory 

compliance, or other behavior of a housing agency.

Field office staff told us that HUD does not necessarily have to go so far as 

to apply a sanction to effect a change for the better in a housing agency’s 

performance. According to some HUD officials, the threat of a sanction—

such as prohibiting a housing agency official from having anything to do 

with HUD programs for a period of time—can have just as positive an 

effect as actually applying the sanction because it creates a sense of 

urgency for the agency to do what it takes to make the sanction 

unnecessary. 

Those field offices that had applied sanctions, or reported that they had 

some basis to judge, are—for the most part—rarely applying the sanctions 

they believe are most effective at improving housing agencies’ 

performance. Figure 5 shows the three sanctions the field offices rated as 

most effective at improving housing agency performance and, for those 

same offices, how many indicated they rarely use it. 
Page 20 GAO-01-94 Public Housing

Figure 5: Limited Field Office Use of Most Effective Sanctions

a

A limited denial of participation excludes for a specific period of time a specific individual or firm(s) 

from participating in a specific program or programs within the jurisdiction of the field office issuing the 

denial. 

Source: GAO’s survey of HUD field office directors of public housing. 

33

3

25

7

25

5

Restrict uses(s) of HUD funds

Sanction

Withhold HUD funds

4

21

11

22

6

19

Rarely use

sanction

Respondents who

reported they

"moderately" or 

"often to very often"

use the sanction

Respondents who

reported they

"moderately" or 

"often to very often"

use the sanction

Respondents who

reported they

"moderately" or 

"often to very often"

use the sanction

Rarely use

sanction

Rarely use

sanction

Issue a limited denial of participationa

Very or generally effective

Respondents who reported

the sanction is "neither 

effective nor ineffective" or 

"generally or very ineffective"

Very or generally effective

Very or generally effective

Respondents who reported

the sanction is "neither 

effective nor ineffective" or 

"generally or very ineffective"

Respondents who reported

the sanction is "neither 

effective nor ineffective" or 

"generally or very ineffective"
Page 21 GAO-01-94 Public Housing

According to a HUD headquarters official, concern about the possible 

short-term effect on residents when HUD does use certain sanctions 

against a housing agency may account, in part, for why field offices so 

rarely make use of sanctions. For example, if a housing agency is not 

administering its Capital Fund allocation properly, withholding those funds 

until it improves its performance could be seen as penalizing the residents 

who ultimately benefit when the agency uses those funds to modernize or 

renovate residents’ homes. Also, the HUD headquarters official responsible 

for field office operations stated that HUD does not have any official 

guidance for its field offices on initiating or using sanctions. As a result, this 

official stated, some field staff may feel vulnerable when they want to use 

sanctions against poor-performing housing agencies because they fear 

headquarters might overrule them. This official acknowledged that HUD’s 

cooperative approach to working with poorly performing agencies is a 

barrier to its use of sanctions and stated that the Department needs to do a 

better job of using sanctions when it is appropriate. In commenting on a 

draft of this report, HUD noted that it has subsequently begun training field 

office staff on providing targeted technical assistance to noncompliant 

housing agencies and assisting these agencies in developing strategies to 

improve performance prior to the field offices’ using discretionary 

sanctions. 

1998 Public Housing Reform 

Legislation Has Made HUD 

More Effective at Holding 

Housing Agencies 

Accountable for Improving 

Their Performance

Recent legislative reforms have improved HUD’s ability to hold poorly 

performing housing agencies accountable for their management operations 

because they mandate deadlines for certain poorly performing agencies to 

improve. Specifically, troubled housing agencies must show substantial 

improvement in their performance and now have at most 2 years to do so. 

HUD defines substantial improvement in terms of PHAS scores and, 

pursuant to the reform legislation, requires the following:

• Within 1 year of being designated as troubled, the housing agency must 

improve by at least 50 percent of the difference between its PHAS score 

and 60 percent—the minimum threshold for being a standard 

performer.10

10For example, a troubled housing agency with a PHAS score of 50 would have to improve to 

a score of 55 within 1 year because that would be 50 percent of the difference between its 

score and 60. A substandard management operations agency scoring 10 out of 30 points 

would have to improve to 14 within 1 year (halfway to 18, or 60 percent of the 30 available 

points).
Page 22 GAO-01-94 Public Housing

• Within 2 years, the housing agency must improve its PHAS score to at 

least 60. 

Prior to PHAS, troubled housing agencies faced no such deadline or 

threshold for improving their performance so that they were no longer 

designated as troubled. Instead, each troubled agency was required to enter 

into a binding memorandum of agreement with HUD that spelled out 

performance improvement goals, deadlines for improvement, and the 

possibility of sanctions if the agency failed to meet any of the terms of the 

agreement. However, according to our survey, when troubled housing 

agencies failed to meet such deadlines, the field offices reported that their 

most frequent response was to extend the deadlines. Specifically, field 

offices reported that in 21 instances, troubled housing agencies failed to 

meet one or more performance improvement goals to which they had 

agreed in writing with HUD. HUD’s field offices responded by extending 

the agencies’ deadlines 19 times.

According to HUD officials, the 1998 public housing reform legislation has 

simplified for them the process of holding troubled agencies accountable 

when they fail to improve their performance in a timely manner. Because 

HUD implements the statutory provisions through PHAS, it now has 

quantifiable and transparent criteria—time frames and PHAS scores—for 

determining when and how it will hold these housing agencies accountable. 

Specifically, HUD officials stated that they now consider it automatic that, 

1 or 2 years after designating a housing agency as troubled, HUD will, for 

any agency that fails to improve as the statute requires, take possession of 

that agency or seek from a court the appointment of a receiver to take over 

all or part of the agency’s operations.11 Later this year, HUD officials expect 

to seek the first receiverships in accordance with the reforms in the 1998 

public housing legislation. 

Conclusions We agree with HUD that it makes sense to reward high performance by 

housing agencies. Doing so can encourage the best agencies to try to 

continue performing at a high level and provide strong motivation to other 

housing agencies to match the performance of the best—ultimately, it 

11The statute directs that for housing agencies with fewer than 1,250 units, HUD must either 

take over all or part of the agency’s operations itself or seek from a court the appointment of 

a receiver to take over all or part of the troubled agency’s operations; for housing agencies 

with 1,250 or more units, HUD must seek the judicial appointment of a receiver. 
Page 23 GAO-01-94 Public Housing

stands to reason, benefiting residents of public housing. Because HUD is, in 

the end, accountable for the performance of the housing agencies, it would 

benefit as well. However, when HUD proposes to reward high performance 

at the expense of those it judges to be standard-performing or troubled 

agencies—as will be the case under its proposed Capital Fund performance 

bonuses—it is all the more important that HUD make certain it is 

accurately measuring performance in the first place. Only then, we believe, 

would it be appropriate for HUD to use PHAS scores as the basis for 

performance bonuses or bonus points when it awards competitive grants. 

Reassessing the field offices’ workload relative to their staffing, as HUD is 

doing, is a reasonable approach when it believes it is unlikely to receive the 

resources it would need to increase substantially the number of staff in its 

field offices. If, at the same time, HUD still wants to use PHAS scores as the 

basis for funding decisions, such as Capital Fund performance bonuses, 

then it would be wise to consider the workload that would be required to 

itself verify the PHAS management operations data that housing agencies 

self-certify. Such a consideration on HUD’s part need not assume that there 

must be an annual, on-site review of each and every agency’s certification 

but could reflect the risk associated with each housing agency. Those 

housing agencies demonstrating they are low risk—for example, those not 

among the agencies the field offices said often certified inaccurately—

could reasonably be subject to such a review less often than others. 

The threat of a sanction can itself be an effective way to improve a housing 

agency’s performance—as some HUD officials told us they have learned 

from experience. How often the Department should threaten or actually 

sanction a housing agency—in circumstances where the 1998 legislation 

does not mandate it—is a determination we believe that HUD is in the best 

position to make. We would suggest that the results from our survey might 

be a start for HUD to make such a determination. With so many of HUD’s 

field offices indicating they almost never threaten or initiate sanctions 

against housing agencies, and even fewer having experience applying 

sanctions, few are likely to have learned first-hand the potential benefits 

from holding housing agencies more strictly accountable.

Recommendations for 

Executive Action

To better ensure that HUD is accurately measuring the performance of all 

housing agencies so that it can reward high performers and hold 

accountable troubled and substandard agencies, the Secretary of Housing 

and Urban Development should
Page 24 GAO-01-94 Public Housing

• develop and implement a cost-effective approach for HUD’s field offices 

to verify housing agencies’ management operations certifications for 

accuracy and completeness, and 

• ensure that HUD uses adequately verified housing agency performance 

information as the basis for (1) the Capital Fund performance bonuses 

and (2) bonus points on applications for competitive grants. 

Agency Comments and 

Our Evaluation

We provided HUD with a draft of this report for its review and comment. 

While HUD did not directly address the report’s recommendations, it did 

provide us with additional information for our consideration. This 

information primarily dealt with (1) the importance of the other PHAS 

indicators for ensuring that HUD accurately assesses housing agencies’ 

management performance; (2) additional quality assurance steps HUD is 

taking to ensure housing agencies’ management operations data are 

accurate; and (3) training HUD has provided its field offices to improve 

their oversight of and assistance to housing agencies. 

First, HUD emphasized that the PHAS management operations indicator is 

not intended to be a stand-alone measure of housing agencies’ management 

performance. According to HUD, all four PHAS indicators together—

management operations, physical condition, financial condition, and 

resident satisfaction—are used to evaluate management performance. 

HUD characterized the four PHAS indicators as providing a system of 

checks and balances to ensure HUD accurately assesses housing agencies’ 

management performance. For example, according to HUD, the PHAS 

resident satisfaction indicator will provide information regarding housing 

agencies’ completion of work orders and security operations, both of 

which HUD measures through the management operations indicator. HUD 

also noted that the physical condition indicator will provide an 

independent assessment of housing agencies’ performance on the annual 

inspections of units and systems component of the management operations 

indicator. 

We agree with HUD that poor performance by a housing agency on the 

components measured through the PHAS management operations 

indicator will at some point be likely to affect the agency’s performance on 

the physical condition, financial condition, or resident satisfaction PHAS 

indicators. However, rather than wait for poor performance in management 

operations to manifest itself in the other PHAS indicators, we believe it is 

important for HUD to have an accurate measure of each housing agency’s 

performance each year. HUD must do so because (1) housing agencies that 
Page 25 GAO-01-94 Public Housing

are substandard in any one of the PHAS management operations, physical 

condition, or financial condition indicators face the same consequences as 

those that are troubled, as determined by an aggregate score for all four 

PHAS indicators; and (2) annual performance bonuses for high 

performers—as HUD is proposing for the Capital Fund—require an 

accurate measure of performance in all of the PHAS indicators each year. 

Consequently, we have left intact our recommendation that HUD ensure it 

uses adequately verified housing agency performance information for 

purposes such as the Capital Fund performance bonuses. 

Second, HUD stated that in addition to relying on housing agencies’ 

independent audits to identify when housing agencies submit inaccurate 

management operations data, it is using other quality assurance activities 

to analyze each agency’s data prior to issuing PHAS scores. We have added 

information to our report explaining the activities of its Real Estate 

Assessment Center (which receives and processes all housing agencies’ 

certifications), as well as the field offices, prior to HUD’s issuing final PHAS 

scores. HUD also noted that its field offices are being provided training to 

review and correlate the information for and between all PHAS indicators 

to better enable them to identify possible instances of inaccurate housing 

agency certifications. 

We agree with HUD that it makes sense to turn to its field offices to better 

assure itself whether it should issue PHAS scores on the basis of housing 

agencies’ self-certified management operations data. The field offices have 

the most direct, day-to-day experience in overseeing and providing 

assistance to the housing agencies. However, we question HUD’s reliance 

on the quality assurance activities it mentioned. These activities do not 

involve verification of management operations data, and as our survey 

results indicated, the field offices do not believe that, under PHAS, HUD 

currently has the tools and resources necessary to ensure that housing 

agencies’ management operations data are accurate and complete. 

Consequently, we have left intact our recommendation that HUD develop in 

its field offices a cost-effective approach to verify housing agencies’ 

management operations certifications. 

Finally, HUD noted that the Department has provided, and plans to 

continue providing, training to its field office staff in several areas, 

including their new and/or revised responsibilities under the 1998 reform 

legislation and the PHAS indicators. HUD also indicated that through indepth training, its field office staff will learn how to provide targeted 

technical assistance for housing agencies that are not complying with 
Page 26 GAO-01-94 Public Housing

program rules and to assist the agencies in developing strategies to 

improve their performance prior to HUD’s using discretionary sanctions. 

We have added information to our report explaining in greater detail HUD’s 

plans for additional field office training. 

HUD also provided technical clarifications to our report, which we have 

incorporated as appropriate. 

Scope and 

Methodology

To assess HUD’s oversight of the management performance of housing 

agencies, we conducted a mail survey of all of the directors of public 

housing in HUD’s Hubs and Program Centers, which are the 43 field offices 

responsible for overseeing these agencies. We surveyed these officials 

because they have direct experience in providing both oversight and 

assistance to public housing agencies in the 50 states and the District of 

Columbia. This experience, we believe, makes them qualified to speak to 

the issues associated with the effectiveness of HUD’s oversight. Because 

we believed that the HUD field staff might view some of our questions as 

sensitive, we pledged to hold in confidence their individual responses and 

not identify any of these HUD officials with his or her responses. We did so 

in order to ensure candor in their responses to questions they might 

consider sensitive while still allowing us to follow up on the information 

they provided. We pretested our questionnaire with three HUD field offices 

and modified it on the basis of the feedback and comments we received 

during the pretests. We received responses from 41 of the 43 HUD field 

office officials, which is a 95-percent response rate. Our survey results 

reflect the information provided by, and the opinions of, the HUD field 

office officials. We did not independently verify the field offices’ responses 

to our questions. 

Throughout our review, we also met with HUD headquarters and field 

office officials involved in oversight of housing agencies. We also visited 

HUD’s two troubled agency recovery centers in Cleveland, Ohio, and 

Memphis, Tennessee. In addition, we reviewed relevant documents from 

each of these offices, past GAO and HUD Office of Inspector General 

reports on issues associated with oversight of housing agencies, and 

statutory and regulatory materials applicable to HUD’s oversight. 

We conducted our review from October 1999 through October 2000 in 

accordance with generally accepted government auditing standards. 
Page 27 GAO-01-94 Public Housing

As arranged with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 10 days after the 

date of this letter. At that time, we will send copies to the appropriate 

congressional committees and the Honorable Andrew M. Cuomo, Secretary 

of Housing and Urban Development. We will also make copies available to 

others upon request. 

Please call me at (202) 512-2834 if you or your staff have any questions 

about the information in this report. Key contributors to this report are 

listed in appendix II. 

Sincerely yours, 

Stanley J. Czerwinski

Director, Physical Infrastructure Issues
Page 28 GAO-01-94 Public Housing

Appendix I

Housing Agencies’ Management Performance Apendxies

Survey ApendxiI
Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Appendix I

Housing Agencies’ Management Performance 

Survey

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Page 52 GAO-01-94 Public Housing

Appendix II

GAO Contacts and Staff Acknowledgments ApendxiI

GAO Contacts Stanley J. Czerwinski, (202) 512-2834

Paul Schmidt, (312) 220-7681

Acknowledgments In addition to those named above, Johnnie E. Barnes, Anne A. Cangi, 

Sherrill Dunbar, Jacqueline Garza, Bill MacBlane, Eric Marts, and Luann 

Moy made key contributions to this report.

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